BHP boss calls for carbon tax

THE world's biggest mining company has urged Julia Gillard and Tony Abbott to act on climate change ahead of other countries, warning that Australia's economy will suffer unless it looks to a future beyond coal.

In a dramatic intervention into the stalled climate debate, BHP Billiton chief executive Marius Kloppers yesterday called for ''a clear price signal'' on carbon dioxide emissions, possibly including both a carbon tax and a limited carbon trading scheme covering power plants.

While BHP Billiton once preferred that Australia act only as part of a binding international climate deal, Mr Kloppers said his company now believed it was more likely individual countries initially would act separately - and those that moved first would benefit when a treaty was signed.

He said Canberra needed to ''look beyond just coal'' and towards other energy sources, or pay the price.

''Failure to do so will place us at a competitive disadvantage in a future where carbon is priced globally,'' he said. ''If we get a global price for carbon and we have got a carbon-intensive generation centre, companies like BHP Billiton that consume the energy will eventually lose their competitiveness because it will pay a higher price for its energy.''

BHP Billiton's entry into the political debate is a direct challenge to both major parties, which have delayed tackling climate change.

Despite striking a deal with the Greens to introduce a cross-party committee to discuss climate change, Labor has maintained it will delay a review of whether to introduce a carbon price until 2012. The Coalition rejects a carbon price as a ''great big tax on everything''.

Mr Kloppers's speech came as Malcolm Turnbull - newly reinstated to the frontbench as communications spokesman - revived divisions in the Coalition by repeating his strong support for an emissions trading scheme.

Mr Turnbull, who lost the leadership to Mr Abbott in December over his stance on climate change, told ABC Radio that the Coalition's policy of creating a government fund to pay for emissions cuts was not ideal.

But he said the opposition's approach was superior to that of Labor, which he accused of having no policy.

''I'm not going to flag now what I'll be saying in shadow cabinet, but my views on climate change, the need for a carbon price, the fact that market-based mechanisms are the most efficient ways of cutting emissions - my views are the same today as they were when I was part of John Howard's cabinet,'' he said.

New Climate Change Minister Greg Combet will meet his Greens counterpart Christine Milne today to discuss the make-up of the climate change committee, which is expected to include members of the ALP, Greens and independents plus experts from outside Parliament.

Mr Combet urged Mr Abbott to rethink his decision to block Coalition members from joining the committee. The government and Greens have said the committee is open to any MPs who support taking action on climate change.

Independent Tony Windsor, who expressed interest in joining the committee, said Mr Abbott's position was a shame because Mr Turnbull and opposition climate action spokesman Greg Hunt would ''have a lot to add'' to the committee.

Mr Hunt dismissed the idea, saying Labor was just setting up a committee to talk about increasing electricity prices.

In a speech to the Australian British Chamber of Commerce in Sydney, Mr Kloppers said climate change was a politically charged issued, but that governments would have to take the difficult step of explaining to consumers that fuel and energy costs would increase.

''There is really no easy answer - all of us who care about this issue need to also recognise that making a difference comes at a price,'' he said.

He said BHP Billiton acknowledged the mainstream science was correct and the need to stabilise and eventually reduce atmospheric carbon dioxide concentrations.

He called on governments to respond incrementally through a combination of regulation and market-based measures. The system should be simple and effective - a combination of a carbon tax, policies to cut emissions from the land and a limited trading scheme.

Mr Kloppers said the carbon price signal must reach consumers so consumption was cut, and should be neutral to the budget, with all revenue raised returned to individuals and businesses.

He called for trade-exposed industries to get a rebate until there was a global climate system, to avoid emissions-intensive businesses just being shipped overseas.

Mr Combet welcomed Mr Kloppers's views.

Mr Combet said his priority areas were support for renewable energy, greater energy efficiency in industry and households, and working towards a carbon price.

Mr Hunt said the Coalition had set out a clear and effective proposal to cut emissions directly through measures such as cleaning up power stations.

BHP Billiton is one the world's largest producers of thermal coal. It made up about 8 per cent of its revenue last year.